Wednesday, September 05, 2007

Do we sometimes take too much time in policy making ?

It would seem so. It has come out many times in the past, that with so many vested interests in each decision making, decision, especially in policy matters take forever to happen. As an example of such decision making and the influences that go into the whole process, people would remember the entire fuss about the initial license to Reliance for running Wireless in Local Loop and how that got converted into a license to run full-blooded cellular services using CDMA. There are umpteen other examples that I can list out, but let me just take a few - the whole issue about SEZ is nothing but a policy in which there are so many parties wanting to participate that things are out of control; there was the whole matter about the upgradation of the Delhi and Mumbai airports and that took a very long time to bet converted into actual contracts; the discussions about whether airlines can fly out of India before 5 years of domestic flights is subject to intense lobbying; and finally the current issue about awarding of 3G contracts and distribution of spectrum to the rival GSM and CDMA players.
All of them show one simple principle: Big business is intricately linked with Government and policy makers and subject the making of policy to incredible lobbying; in many cases such as Reliance and its initial cellular contract, the lobbying is enough to over-turn Government policies and make new ones.
But even in areas where there is less dispute due to business lobbying, there gets to be all sort of other political factors thrown in. Sometimes, this process can delay policy making by large periods and frustrate the businesses on whom India is depending to get the mega-investment required to generate the large number of jobs required. Take an example of the incentives required for the policy of getting large scale investment into India by semi-conductor manufacturers. It has not been able to be settled and the first impact of this delay is now apparent:

"We were in serious discussion for chip manufacturing in India but the government was a bit slow on semiconductor manufacturing proposals", Intel Chairman Craig Barrett who is on his ninth visit to the country said.
Barrett justified his decision to go to Vietnam and China by saying "to set up a manufacturing base, we do planning years in advance. The China and Vietnam plans were made much earlier. As the government was slow in announcing the policy, in the window period we went to these two countries".

These are setbacks that the Government can ill afford. In this age of many other companies appearing as attractive investment destinations, India cannot afford to be slow in decision making, especially for areas where there are not too many controversies.

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posted by Ashish Agarwal @ 10:10 AM